Aug 6 Moody's Investors Service said
Massachusetts legislation aimed at curbing healthcare costs, to
be signed into law on Monday, may put a strain on hospitals'
credit ratings because it will hamper their revenue growth.
Lawmakers passed the legislation last week, making
Massachusetts the first state in the nation to curb how much
providers and insurers can spend on medical care, and putting
the state on course to save up to $200 billion over 15 years.
The law will limit revenue growth and reduce operating
flexibility for hospitals in the state, Moody's said.
The bill also allows the state to use an excise tax on
insurance companies to support smaller, less profitable
facilities, "potentially allowing them to remain in business
longer than would otherwise be possible and limiting the ability
of larger systems to consolidate and grow through acquisitions,"
Massachusetts plans to save money by pegging any increase in
healthcare costs to the growth rate of the state economy through
2017. In the following five years, spending would be further
constrained to half a percentage point below the growth of the
Moody's said it could have been even worse for hospitals,
but a "luxury tax" on the most expensive providers was cut from
the final version of the bill.